Artificial Intelligence (AI) is transforming tax compliance in India, significantly enhancing revenue collection. Over the past four years, the Income Tax Department has utilized AI tools to encourage over one crore taxpayers to voluntarily update their returns, yielding an impressive Rs 11,000 crore in additional tax revenues. The AI-driven approach identified Rs 29,000 crore in undisclosed foreign assets and Rs 1,000 crore from virtual digital assets (VDAs) in FY 2024-25, as noted by CBDT Chairman Ravi Agarwal. The sophisticated AI framework not only detects under-reporting but also identifies non-filers among India’s 40 crore unique taxpayers. The NUDGE initiative, employing non-intrusive communication, successfully prompted taxpayers to revise 1 crore returns, with a government extension allowing further updates. Additionally, AI scrutinizes political donation claims, contributing Rs 404.2 crore in tax revenue. This evolving, data-driven strategy is pivotal for future tax compliance and enforcement in India.
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